Higher education faces smaller possible cuts

FRANKFORT, Ky. (AP) - Kentucky House leaders crafting a state spending blueprint have spared higher education from the full extent of a proposed budget cut, but public universities and colleges will likely face some reductions, House Speaker Greg Stumbo said Monday. The budget writers also were looking at some changes to the state's tax code, including suspending some tax exemptions, to help balance the next two-year budget, Stumbo told reporters. House Democratic leaders were putting the finishing touches Monday on the spending plan that will be presented to rank-and-file members. Lawmakers are trying to plug a shortfall exceeding $1 billionfor the next two-year state budget cycle, which begins July 1. The shortfall was caused by the deep economic downturn. "It appears we're probably going to be balanced and maybe with a little bit of change left over," said Stumbo, a PrestonsburgDemocrat. The House leadership plan appears to rely on a combination oftargeted spending cuts, suspension of some tax loopholes and othersteps as its drafters look for a balanced budget. Top House budget writers recently proposed cutting 2 percent ofstate funding for public universities and colleges in the firstyear of the next budget and continuing the reduced funding in the second year. The 2 percent cut would produce yearly savings ofabout $20 million. Gov. Steve Beshear, in his budget plan to lawmakers, proposed nocuts for postsecondary institutions in the first year and a 2percent cut in the second year. Beshear proposed restoring the cutsto higher education if Kentucky gets more stimulus aid fromCongress. Stumbo said Monday that the spending plan by House leadershipwould restore about $5 million to $6 million of the proposed cutsfor higher education in the first year. Another $10 million or sowould be restored to universities and colleges in the second year,he said. "So did they get fully restored? No," Stumbo said. "Did theyget more than what we had originally anticipated? Yes." Stumbo said House leaders were looking at shifting some bondingmoney Beshear included in his budget plan. The House leadershipplan was aimed at "redirecting that money probably into schoolsand local projects that are spread out more across the state,"Stumbo said. House leaders also are looking at some tax code changes that,Stumbo said, could be seen as the "first step in taxmodernization." The plan would not raise tax rates, he said. One proposal would temporarily suspend tax write-offs forbusinesses reporting losses. Those businesses would still be ableto eventually claim those losses for tax purposes. Another proposal under review would lift the state income taxexemption on the first $80,000 in income for nonmilitary Kentuckyresidents working overseas. Stumbo said the tax changes would not cause hardships forindividuals or businesses. The Republican-led Senate will get its crack at the spendingplan after the House. In another development, Stumbo accused a state agency ofstonewalling lawmakers who are seeking details about a Medicaidmanaged care program that's been eyed for possible expansion. Stumbo wrote to Cabinet for Health and Family Services SecretaryJanie Miller demanding details on whether the Passport Health Planis cost effective for the state. Passport serves about 165,000members in Jefferson County - including Louisville - and 15 nearbycounties. "For several weeks now, the cabinet has stonewalled on givingthe House the information it is entitled to have, but that needs tostop now," Stumbo said in a release. House leaders have sought information about Passport todetermine whether its extension could reap cost savings elsewherein Kentucky. Miller responded that the cabinet has provided all requestedinformation in a "timely manner" during the legislative session. She assured Stumbo he would receive responses to most of hisquestions as early as Tuesday, with the other replies coming "assoon as possible." Medicaid - the state-federal health insurance program for thepoor and disabled - covers about 790,000 Kentuckians. Its rollshave risen sharply amid the economic downturn.

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